Friday, December 3, 2010

Today's paradigm of rapidly advancing technology is not only accelerating, but converging, self-reinforcing and merging. Metabolic Engineering is an excellent example of information technology, biotechnology, materials science and nanotechnology being blended to achieve an end result that none on an individual basis would likely achieve. We have been creating hybrid crops with desireable characteristics for many decades (if not centuries), but the difference here is that the intervention is much more direct, the end result more pre-defined and the organisms used go well beyond crops and different breeds of livestock. While there are certainly risks, and there will likely a multitude of unforeseen and undesireable results, we are entering an age where "hit & miss" will be increasing replaced with "aim & fire". Please see the following link for more background on metabolic engineering:

The below article is promising in that the available VIX-related shares are issued as "ETNs" and are therefore subject to the creditworthiness of the issuer (unlike ETFs), but the article indicates that there are more issuers coming to market and, as a result, some of the credit risk can be mitigated via usage of more than one VIX sensitive ETN within a portfolio. The Citigroup offering is particularly interesting, but I think we need to see some trading history to get a better feel for how this hybrid structure should be used.

“NEW YORK (Dow Jones)--U.S. stocks extended gains Thursday after pending home sales unexpectedly soared and investors mulled whether European officials can help stop the spread of the euro zone's debt crisis.”

The combination of the two issues mentioned above will be supportive of the US Dollar should they continue their recently established trends.

What I always find interesting is how things evolve in front of everyone’s eyes yet their perceptions are so slow to respond. Occasionally, I like to offer those who I communicate with an opportunity to win a friendly bet with their favorite “victim”. Ask your “target” the following question:

“How much has the S&P Homebuilders ETF underperformed the Emerging Market Index ETF over the past 3 years in terms of price?”

a) The Homebuilders ETF has underperformed the Emerging Market Index ETF between 15-24%b) The Homebuilders ETF has underperformed the Emerging Market Index ETF by over 25-34%c) The Homebuilders ETF has underperformed the Emerging Market Index ETF by over 35%d) None of the above

The answer: None of the above

Below is a 3-year chart showing how the S&P Homebuilder ETF is effectively tied with the Emerging Market Index despite the “Rapid Rise of China” and the “Worst Real Estate Crisis Since the Great Depression!”:

IBM scientists Wednesday unveiled a new chip technology that integrates electrical and optical devices on the same piece of silicon, enabling computer chips to communicate using pulses of light (instead of electrical signals), resulting in smaller, faster and more power-efficient chips than is possible with conventional technologies.The new technology, called CMOS Integrated Silicon Nanophotonics, is the result of a decade of development at IBM’s global Research laboratories.The patented technology will change and improve the way computer chips communicate — by integrating optical devices and functions directly onto a silicon chip, enabling over 10X improvement in integration density than is feasible with current manufacturing techniques."

Now you have probably never heard of “nanophotonics”, and if you haven’t , don’t feel bad. It isn’t exactly holiday season cocktail chatter.

The reason why this breakthrough is important is that the technology, and those similar to it, will enable the continuation of the rapid advancement in the computing power which in turn is vital to advances in many areas, but especially in the area of life sciences (i.e. healthcare).

The greatest promise for curing the many diseases we are faced with comes in the form of enhanced molecular diagnostics, molecular synthesis and genetic information processing. These are all fantastically computationally demanding activities, but the bulk of healthcare costs come from the treatment of chronic diseases rather than actual cures. The breakthroughs in genetic sequencing, RNAi (a means to suppress undesirable genetic expression), and molecular analysis via digital means during the past decade are all just first steps in overcoming the healthcare & quality of life challenges we will face as we age.

This development is not only good for the “N” (nanotechnology), the “B” (biotechnology) and the “I” (information) in my phrase “N.ew B.R.I.C.”, but also the “R” (robotics) and “C” (cognitive). As we improve our computer technology by the next 10-100 fold, we will start to approach the needed levels to achieve broader forms of artificial intelligence that will in turn propel both robotics and cognitive technologies to the next level. As we age as a species, we will not only have increased health issues, but also we will need assistance from robotics to overcome physical impairments, as well as cognitive innovation to treat/manage dementia related challenges.

Most should not invest in “science projects”, and no, I am not recommending IBM as an investment, but it is important to remember our problems will not be truly resolved by easy money, government intervention or political debate. Our future is bright because of the same essential ingredient that Edison used to create the light bulb: curiosity, vision & innovation.

So hopefully, as people take advantage of the house bargains that are available today they will have the option of living in that home for many years to come with little medical assistance and perhaps a very loyal “robo-dog” that not only doesn’t need to be walked, but can also prepare their tax return!